Share prices on Wall Street plunged around 4.5 percent in early trading today as fears of a pending recession were fueled by a bigger-than-expected rise in U.S unemployment claims.

European equities also fell heavily today amid concerns about economic recovery in the United States. Germany's DAX index fell by more than 5 percent. Traders blamed the effects of a ban on the short selling of financial stocks in other parts of Europe.

Short selling is a way traders profit by correctly predicting share prices will fall. The short-selling ban announced last week in France, Italy, Spain, and Belgium has pushed investors toward Germany's DAX, which was excluded from the ban.

The main stock market index in Paris plunged more than 6 percent today.

Index declines of more than 5 percent were seen in Spain and Portugal.

In London, the FTSEurofirst 300 index lost 4 percent of its value. Switzerland's index also fell by more than 4 percent while Italy's main index fell by more than 3 percent.